6.1.A. ERMUSR 05-10-2016 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
May 10, 2016 6.1a
SUBJECT:
Staff Updates—General Manager
DISCUSSION:
• The Board of Directors of the Minnesota Municipal Power Agency (MMPA) met on
April 26, 2016 in Faribault,Minnesota.
Construction has begun on the 46 MW distributed generation project in Shakopee.
MMPA's auditors presented the Agency's 2015 audited financial statements to the Board.
This information can be found on MMPA's website www.mmpa.org.
The Board approved a standard interconnection agreement for distributed generation
projects in Member communities.
Construction activities are underway for the Black Oak Wind Farm. MMPA has a
contract to purchase all of the output of the facility.
The MMPA Annual Meeting is scheduled for July 26 and will be held in Anoka, MN.
Invitations will be sent to the Commission closer to the meeting.
• The Minnesota Municipal Utilities Association(MMUA) Board of Directors met on
April 20 following the MMUA Legislative Rally.
They have approved executing a purchase agreement to acquire an office/warehouse
building in Plymouth in an effort to transition from renter to owner.
The MMUA auditing firm Clifton Larson Allen reported to the board on the 2015
financials and gave an unmodified and clean opinion.
The board also was provided with and update from the MMUA Leadership Development
Program Committee on the status of the new leadership development program which is
expected to be available to members in late 2016.
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The board will hold their annual strategic planning session on May 25 and 26 in
Plymouth.
The MMUA Summer Conference is scheduled for August 15-17 and will be held at
Cragun's Resort in Brainerd,MN.
• The City and Utilities have scheduled their annual employee breakfast for May 12. All of
the managers contribute money to purchase food and then cook and serve breakfast for
the employees as a way to thank them for their hard work.
• On April 25 I met with Greg Ridderbusch, the CEO/President of Connexus Energy. We
have scheduled quarterly meetings to discuss issues and opportunities. We discussed the
legislative session, electric vehicles, and electric service territory.
• I met with Connexus staff on April 27 for a kickoff meeting regarding the transfer of
Area 2 of our service territory transfer agreement. Generally speaking,this area is the
southeast corner of Elk River south of 65th Ave. The transfer date for this area has been
established as September 20,2016. In this area there are approximately 200 customers.
• The electric cost of service study is well underway. Tom Sagstetter has taken on a project
lead role for the initiative. Through the process of collecting information for our third
party consultant, Dave Berg,we have gone through another iteration of electric service
territory cost projections and they were consistent with our 2014 analysis.
ATTACHMENT:
• Minnesota Municipal Utilities Association Capitol Letter—April 22, 2016
• Minnesota Municipal Utilities Association Capitol Letter—April 29, 2016
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Vol. 15, No. 7 April 22, 2016
House Budget Bills Take Shape
On Tuesday, the House Job Growth and Energy Affordability Committee passed its omnibus
bill, which contains appropriations and policy provisions related to energy and economic
development.
The bill includes $15 million for the Border to Border Broadband Grant Program. In terms
of grant funding, the bill now defines"underserved" as having access to broadband at speeds
of 10 MBS down and 3 MBS up,but less than 25 MBS down and 3 MBS up. "Unserved"areas
are defined as lacking access to broadband at speeds of 10/3. It also provides incumbent
providers with the right of first refusal on grant applications; a provision that has met vocal
opposition.
There are only a few energy policy measures included in the bill. They would:
• Discontinue Xcel Energy's nuclear cask payments to the Renewable Development
Fund when $10 million per cask is reached
• Set regulations for marketing materials related to Xcel's Community Solar program
• Prohibit the state from spending money on a state implementation plan for the federal
Clean Power Plan until the Supreme Court stay is lifted
• Change the membership of the Public Utilities Commission to include one
commissioner from each congressional district and one at-large member
• Exempt combined heat and power facilities over 50 MW in investor-owned utility
service territories only from having to offset their greenhouse gas emissions.
• Allow municipal and cooperative utilities to modify their CIP energy savings goals
and count infrastructure savings without achieving 1% customer-side savings
On Thursday, the House Ways and Means Committee combined this bill with the agriculture
and environment omnibus bills into HF 3931. The House is assembling three large omnibus
bills, unlike the single supplemental budget bill being developed in the Senate. Additionally,
the Senate's bill is purely appropriations, whereas the House bills contain policy changes.
Due to the vast discrepancies in the House and Senate bills and processes, it is unlikely that
any of the policy provisions contained therein will become law this session. MMUA staff will
continue to monitor the progress of the omnibus bills.
Senate Tax Committee Discusses Utility Property Tax Reform (Again)
On Thursday, the Senate Tax Committee heard an updated proposal from Chairman Rod
Skoe (DFL-Clearbrook) to modify the property taxation of electric utilities. Last year, Sen.
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Skoe included in the Senate tax omnibus bill a proposal to move electric generation off the
personal property tax onto a production and capacity tax formula. A tax bill was never
enacted in 2015, and the conference committee with the House remains open.
This being so, Sen. Skoe and stakeholders continued to work on the proposal during the
interim. Sen. Skoe's updated proposal includes the request from investor-owned utilities to
move transmission and distribution, in addition to generation, onto a new formula to allow
for a more streamlined valuation process.
Sen. Skoe said that the object of this proposal is to provide an easier-to-understand, more
predictable, and revenue-neutral process of utility property taxation. He said there are a few
pieces of data he needs from utilities before his proposal will be finalized, but he intends to
continue this conversation in the tax conference committee.
Xcel Energy and Great River Energy both testified in support of the concept of the bill, but
identified a couple issues that need continued work.
Please note that municipally-owned generation, transmission, and distribution continues to
be exempt from property-taxation under this proposal. MMUA has been monitoring these
tax discussions to ensure they continue to be exempt from any new tax structure. SMMPA
has been involved in the discussions with Skoe's office from the beginning since it has affected
generation facilities. Other municipal power agencies are engaging in the discussion as the
new proposal includes transmission.
MMUA Legislative Rally
A big thank you to all the members who joined us on Tuesday for MMUA's Legislative Rally!
Taking the time to visit St. Paul and visit with your legislators is so important to our
organization's efforts! We had a great turnout at our legislative reception,with 27 legislators
attending.
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Vol. 15, No. 8 April 29, 2016
Omnibus Bills Passed Out of House and Senate
This week,the Legislature's attention was focused on passing each body's respective omnibus
supplemental budget bills.
The House of Representative had assembled three separate omnibus bills: 1) education and
higher education, 2) state government and health care, and 3) environment, agriculture,
economic development, and energy. The third bill, H.F. 3931, authored by Rep. Pat Garofalo
(R-Farmington) contained the appropriations and policy provisions related to energy and
broadband that have been detailed in previous versions of The Capitol Letter. When this bill
was debated on the House floor, no amendments related to broadband or energy were
adopted.
On Thursday, the Senate passed its single omnibus supplemental budget bill that contained
appropriations for every area of state government (but very little policy). The bill had no
areas of concern for MMUA going into the floor debate, and no harmful amendments were
offered.
Now that each body has finished passing its supplemental budget bills, work will begin to
compare the bills and assemble conference committees to work out the differences (of which
there are many). Given that the House has three bills and the Senate only one, this will
likely be a complicated process.
Senate Vote Planned on Regulatory Certainty Bill
The MPCA and bill author Sen. John Marty (DFL-Roseville) have notified MMUA that the
"regulatory certainty" bill will be debated on the Senate floor next Monday, May 2. As
explained in previous editions of The Capitol Letter, S.F. 3272 would allow the MPCA to
provide municipal wastewater treatment facilities with "regulatory certainty" if they
voluntarily install biological nutrient removal systems to remove nitrogen in addition to
complying with the new phosphorus standard. This means the MPCA would agree not to
increase the systems' phosphorus or nitrogen limits for the useful life of the equipment (up
to 20 years).
If the option for"regulatory certainty"would be helpful as your city considers upgrades to its
wastewater treatment facilities, please contact your State Senator and ask them to support
the bill!
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